Written Assignment Unit 3
MBA Business Administration
University of the People
BUS 5111-01 - Financial Management
Case Study
This case study is a continuation of the previous week focusing on WePROMOTE Company.
Last week, we have analyzed the profitability of two alternative cases and make
recommendations. WePROMOTE is a company that provides promotional materials for
businesses. The project we need to analyze is the manufacturing of a unique case for
smartphones. The cases should be durable, attractive, and fit all models of the smartphone.
Additionally, it will have the logo of our client that is a local company to enhance public
relations.
Financial Data
The final data regarding the project has been collected and compiled. The equipment will cost
$70,000 and is incurred at the beginning of the year. The project is expected to have annual cash
revenue of $30,000 and annual cash outflows of $11,000. The equipment is expected to
depreciate within 5 years on a straight-line basis with no salvage value. The tax rate will be 30%
and the discount rate is 6%.
Financial Analysis
We have to do an NPV analysis and based on the results make recommendations. Net present
value (NPV) is a common method of analyzing the viability of projects when making capital
budgeting decisions or investment analysis (Daryanto & Primadona, 2018). It considers the cash
flows over the lifespan of the project and takes into account the depreciation method used on the
project. We have to perform a few calculations before doing an NPV analysis. First, we calculate
the depreciation values and the depreciation tax savings. Then we calculate the annual net cash
flows.
MBA Business Administration
University of the People
BUS 5111-01 - Financial Management
Case Study
This case study is a continuation of the previous week focusing on WePROMOTE Company.
Last week, we have analyzed the profitability of two alternative cases and make
recommendations. WePROMOTE is a company that provides promotional materials for
businesses. The project we need to analyze is the manufacturing of a unique case for
smartphones. The cases should be durable, attractive, and fit all models of the smartphone.
Additionally, it will have the logo of our client that is a local company to enhance public
relations.
Financial Data
The final data regarding the project has been collected and compiled. The equipment will cost
$70,000 and is incurred at the beginning of the year. The project is expected to have annual cash
revenue of $30,000 and annual cash outflows of $11,000. The equipment is expected to
depreciate within 5 years on a straight-line basis with no salvage value. The tax rate will be 30%
and the discount rate is 6%.
Financial Analysis
We have to do an NPV analysis and based on the results make recommendations. Net present
value (NPV) is a common method of analyzing the viability of projects when making capital
budgeting decisions or investment analysis (Daryanto & Primadona, 2018). It considers the cash
flows over the lifespan of the project and takes into account the depreciation method used on the
project. We have to perform a few calculations before doing an NPV analysis. First, we calculate
the depreciation values and the depreciation tax savings. Then we calculate the annual net cash
flows.
